| Use stops no matter what they say | | | | Day Trading Technique: Cut losses |
| Some people may feel that a stop is not a good | | | | This is the rule #1 to success in day trading. Most |
| thing as it would put you out of a position just | | | | people do just the reverse and wonder why they |
| before a move that could net you huge profits. | | | | are losing so much from their trading. They let their |
| However, stops also protect you from huge losses, | | | | losses run while cutting their winners short. |
| as they would put you out of a position just before | | | | Unfortunately, this cardinal rule is easier said than |
| the market plunges. The key is to place your stops | | | | done. Learning to cut your losses short requires |
| intelligently, perhaps just below a fixed spread from | | | | significant discipline. You should determine exactly |
| your starting price. You should make the decision | | | | how much of a loss would indicate an exit point for |
| right when you place your trade - this ensures that | | | | you right when you make a trade, and stick to that |
| you do not later get influenced by market emotions. | | | | always. |
| Day Trading Technique: Trailing profit targets are | | | | Day Trading Technique: Select the right markets |
| your friend | | | | Day traders can only make money in liquid markets; |
| When day trading, letting your winners run indefinitely | | | | they thrive on volatility. Markets that hardly move |
| might not always be a good idea, since you are | | | | are very dangerous to day traders and can be very |
| unable to predict market movements fully. Yet, you | | | | risky if you do not have the time to watch your |
| do not want to get out of a winning position | | | | trades all the time. There must be large enough daily |
| prematurely. What should you do then? | | | | or short-term movements to make trading |
| The best way around this is to set trailing profit | | | | worthwhile. |
| targets depending on the chart patterns. If the bullish | | | | One more day trading tip: Avoid markets where |
| pattern you had been expecting continues, allow your | | | | trades tend to occur erratically, with periods of low |
| winners to run - set progressively higher profit | | | | activity followed by sudden gaps in prices. These |
| targets; but if you notice a reversal, get ready to | | | | gaps are very difficult to predict and can spell a huge |
| get out. | | | | loss for you as a trader. |